I would love to run GUI Emacs using this, so this is great news for me.

At the same time, does anyone both love WSL, but is also scared about Microsoft's strategy here?

I'm at the point where I have a main desktop computer that I use for general purpose and gaming, and WSL has been great for me to also be able to do few-compromises coding work on it (previously had an arch linux partition but was tired of having to reboot to access it).

No, because:

1 - throughout all these years Linux developers have been giving money to Apple instead of supporting Linux OEMs. Using a BSD flavour to target Linux

2 - Apparently many like the extend done by Google with Android and ChromeOS

Correct me if I'm wrong but unlike your point 2, doesn't WSL make the Linux kernel obsolete in the long run? That'd be the Extinguish part which is still far beyond the horizon but isn't it something worth thinking about?

WSL2 actually uses a virtualized Linux kernel, as opposed to WSL1, which implemented Linux APIs on top of Windows, a la Wine.

Here's the source (literally). https://github.com/microsoft/WSL2-Linux-Kernel